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Patterns of disruption: Impact on wholesale banking

Can banks succeed within The Big Shift?

Wholesale banking is increasingly vulnerable to a set of fundamental macroeconomic trends that are reshaping the global business landscape–what we call The Big Shift. While this shift catalyzes disruptions in all industries, Deloitte’s Center for the Edge and Center for Financial Services have identified those impacting wholesale banking. By learning these patterns of disruption, we hope leaders anticipate them. By anticipating them, we hope leaders act. By acting, we believe leaders can create value in an increasingly challenging world.

Your future in wholesale banking

In banking, hundreds of fintech firms around the world are challenging incumbents in a number of businesses, including payments, lending, and securities trading.

In response, leaders tend to fall into one of two camps: complacent or overwhelmed. Either approach leaves them even more vulnerable. In this kind of environment, leaders need to pull themselves out of the short-term time horizons that consume their attention and focus on the long-term forces that are reshaping the business landscape so that they can better anticipate, and then act upon, the changes that are ahead.

This paper will explore some the patterns of disruption that are most likely to impact leaders in wholesale banking. The best way to prepare for the future is to anticipate it.

Download the "Patterns of disruption: Impact on wholesale banking" report to learn more about these patterns or read below for a peek into our findings.

John Hagel and Val Srinivas live at The Innotribe Sibos event

Launched in 2009, Innotribe was created to identify the emerging technologies and innovative trends surrounding the financial services industry and generate discussions on their potential impact moving forward. Benefitting from SWIFT’s central position, Innotribe provides a platform to the global financial community to understand the dynamics behind technology changes and to help focus on the opportunities for transformation rather than the threats to current market practices.

In 2015, Deloitte Center for the Edge published a series of solid research on “Disruption Patterns”, which inspired Innotribe to dedicate a session of its program at Sibos 2016 in Geneva, requesting Deloitte to produce a zoom-in/deep dive version of their research to share with the financial industry at large.

This paper is the result of this analysis. On September 26, 2016, John Hagel and Val Srinivas spoke at the Sibos conference on the topic of Patterns of Disruption in wholesale banking. These subject matter experts explored patterns of disruption from an incumbent’s point of view. What turns a new technology or new approach into something cataclysmic for banks and the marketplace as a whole? What patterns may impact wholesale banking?

How three patterns of disruption can emerge in wholesale banking

Our report focuses on three businesses within wholesale banking to illustrate how certain patterns of disruption may possibly emerge in the future: trade finance, securities lending, and foreign exchange (FX) trading. Each of these areas are quite large, accounting for a meaningful size in revenues and profits. They are also ripe for disruption.

The three patterns we see most relevant to these businesses are:

Expand market reachThis pattern typically involves the deployment of platforms to help connect fragmented buyers and sellers, wherever they are and whenever they need to connect. What would make a market vulnerable to the expand market reach pattern? Those that have large numbers of underserved customers and a broad range of hard-to-find and differentiated products that might address the needs of those underserved customers.

Turn products into product platformsThis pattern involves shifting away from standalone, self-contained products or services. In this case, the disruptors define and deliver a foundation of core functionality that third parties can build upon to tailor products and services to meet the needs of smaller segments of customers or individual customers. What would make a market vulnerable to this pattern of disruption? If the market today consists of tightly integrated and standardized products and the customers have very diverse use needs, this might increase vulnerability to new vendors who offer product platforms that could lead to a proliferation of much more specialized products and services.

Connect peersThe connect peers pattern of disruption is more speculative given that it has yet to play out in any significant market or industry, but our analysis suggests that it has the potential to disrupt a broad range of wholesale banking markets. This pattern of disruption moves away from the hub-and-spoke platforms that characterize the expand market reach disruptors described earlier. Instead, the disruptors in connect peers focus on deploying distributed platforms that enable participants to connect directly with each other without the need for an intermediary.

Explore all nine patterns of disruption

​Patterns of disruption podcast

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Co-Chairman | Center for the Edge

John is co-chairman for Deloitte LLP's Center for the Edge with nearly 30 years of experience as a management consultant, author, speaker, and entrepreneur. He has served as senior vice president of s... More

Managing Director | Center for Financial Services

Jim is the managing director of the Deloitte Center for Financial Services, where he is responsible for defining the marketplace positioning and development of the Center’s eminence and key activities... More

Research Leader, Banking & Capital Markets

Val is the Banking & Capital Markets research leader at the Deloitte Center for Financial Services. In his role, Val works closely with the Center and extended Financial Services team to support and c... More

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